The challenge for regulators is to protect against systematic risks and maintain a fair, safe, and

competitive market.

Republic Act 11032 or the Ease of doing Business Act of 2018 provides that in order to establish effective
practices, aimed at the efficient turnaround delivery of services by the government it should establish a
program for the adoption of simplified requirements and procedures to expedite business and
nonbusiness related transactions in the government.

The Banko Sentral nga Pilipinas is a vital agency in our country for its primary objective is to maintain
price stability conducive to a balanced and sustainable economic growth. It is myopic to directly
discredit the authority and capacity of SEC and to ultimately claim that BSP should take over. Your
honors, this side of the bench presents our risk-benefit analysis which presupposes that subjecting
online lending under the supervision of BSP would cause more harm than benefit.

Second, Lending companies will be greatly affected if the BSP is to be the sole regulatory authority of
lending in general. On the first analysis, the regulatory functions between BSP and SEC has already been
clearly delineated by law, under Section 11, of RA 9474 which provides that Lending companies shall be
under the supervision and regulation of the SEC: while lending companies which are subsidiaries and
affiliates of banks and quasi-banks shall be subject to BSP supervision. Under the BSP, lenders would be
compelled to take precautions in approving loans and take steps to protect themselves from bad debts
by requiring collateral from borrowers, which could have a negative effect in the ease of getting loans by
borrowers. A study from a financial economists, Edward Murphy on his book “overview of U.S financial
Regulatory policy for banking and securities markets” presents that the US regulatory function and its
Securities and Exchange Commissions has focused on resolving conflicts of interest and requiring full
disclosure of material information, unlike bank regulation that tends to focus on prudence. In
connection to the lenders point of view, high risk investments should have high income. If BSP is going
to regulate online lending by controlling costs and charges on loan, there would be less motivation on
the part of the lenders to engage in online lending. Risks of uncollectibility is necessarily high for
unsecured loans like this. We need to compensate the risk in order to motivate more lenders to render
their services.

Ladies and Gentlemen, online lending relates to issues concerning economic policy these issues can
addressed best by the Securities and Exchange Commission your honors inasmuch as SEC is concerned
with ensuring the safety and soundness of the firms it regulates, its primary concern is maintaining fair
and orderly markets and protecting investors from fraud. Your honors, we are not trying to draw a
roadmap of legal jurisdiction, but rather we are matching, in accordance with law, the financial
regulatory agency to its financial regulatory policy based on the kind of financial or regulatory difficulties
that they generally address. Proposing the contrary would result to overlapping of functions and thus
placing the state at an economic disadvantage. With all these reasons, this house stands.